Does Homeowners Insurance Cover Legal Issues?

Popular Questions

Do you need to purchase legal coverage with your homeowners insurance policy?
When and how does homeowners insurance cover legal fees?
How much do I have to pay if homeowners insurance does cover legal fees?
If homeowners insurance doesn’t cover legal expenses, what will?
Expert(s) Found on this Page

Do you need to purchase legal coverage with your homeowners insurance policy?

As a new homeowner, I’m concerned about what all is covered under my standard homeowners insurance policy. I’m worried about getting sued and not having enough legal coverage under just one policy. Do I need to purchase legal coverage along with my homeowners insurance policy?

Honestly, I’ve not heard of that insurance pairing before. Under your standard homeowners policy, you have liability coverage built in. If you’re sued and the cause of the lawsuit is not excluded, your insurance company is obligated to come to your defense and provide coverage for legal fees.

Offering legal insurance is another way for lawyers to sell their services at a high price. Legal insurance is not typically needed with homeowners insurance. Considering the coverage built into standard homeowners policies, that would be an unusual and unnecessary combination.

When and how does homeowners insurance cover legal fees?

Standard homeowners insurance policies come with liability coverage to protect you against claims for bodily injury or property damage. If you or your family members (including pets) cause injury to someone or damage their personal property while they’re on your premises, your homeowners insurance policy’s liability coverage will protect you.

Homeowners insurance liability coverage pays for the following:

• Property damage: Coverage will pay for the repair or replacement of personal property belonging to a third party that was damaged or destroyed on your premises.
• Medical fees: Coverage will pay for ambulance fees, doctor visits, hospital bills, etc. for any third parties who get injured on your property. Injuries may result from you, your family members, or your pets physically causing someone harm, or from something as simple as someone slipping on your icy porch or falling on your steep stairs.
• Legal fees: Coverage will pay for the cost of your legal defense in the event of a lawsuit, including attorney fees and the amount you’re ordered to pay if the court rules against you.

Another nice thing about a standard homeowners policy’s liability coverage is that this aspect of the insurance doesn’t have its own deductible that you’re required to meet before they start reimbursing you. You can always review your specific homeowners insurance policy to better understand exactly what’s covered under the liability aspect.

How much do I have to pay if homeowners insurance does cover legal fees?

Standard homeowners insurance policies typically come with liability coverage limits of $300,000. There’s usually a minimum of at least $100,000 in coverage built in, but more commonly it’s $300,000 or even $500,000. If your legal fees exceeded the amount of liability coverage your specific policy provides, you’d have to pay out of pocket for any amount exceeding this limit.

You can always add more liability coverage to your homeowners policy. Keep your specific needs in mind and work with your independent insurance agent to come up with the proper amount of liability coverage that works best for you.

If homeowners insurance doesn’t cover legal expenses, what will?

If you’re concerned that your homeowners insurance policy’s liability limit still isn’t high enough after you’ve increased your coverage, you might want to purchase umbrella coverage. I’d recommend this route rather than worrying about looking into a legal policy. Umbrella policies provide extra liability coverage in the event that you end up with a claim that exceeds your homeowners policy’s limit.

Umbrella policies provide liability protection up into the millions. You may even opt to increase this coverage beyond the standard $1 million limit, if you wish. Consider the specific risks involved in your home to determine how much umbrella coverage you might need.